Is there a Payoff from Top-Team Diversity?

There are many reasons companies with more diverse executive teams should outperform their peers: fielding a team of top executives with varied cultural backgrounds and life experiences can broaden a company’s strategic perspective, for example.

To score a company’s diversity, we focused on two groups that can be measured objectively from company data: women and foreign nationals on senior teams (the latter being a proxy for cultural diversity).

For companies ranking in the top quartile of executive-board diversity, ROEs were 53 percent higher, on average, than they were for those in the bottom quartile. At the same time, EBIT margins at the most diverse companies were 14 percent higher, on average, than those of the least diverse companies.

To read the article from McKinsey, please click here.